In a world where the S&P 500 is paying a paltry 2.0%dividend
yield , savings accounts earn next to nothing and treasury yields
are barely beatinginflation , millions of investors are turning to
high-yield stocks to supplement their income.
For most investors, that means buying higher-yielding U.S.
I've seenreal estate investment trusts (REITs) like
Annaly Capital Management (NYSE:
and master limited partnerships (MLPs) like
Kinder Morgan (NYSE:
become wildly popular lately.
But while non-traditional U.S. investments like REITs and MLPs are
a good start, if you really want to find higher-yielding stocks,
then you need to look somewhere else entirely. Specifically, you
should start looking overseas.
As the Chief-Strategist behind
, my latest research shows that over 90% of the world's
highest-yield opportunities are located in foreign markets.
That includes companies like global shipping giant
Navios Maritime Partners (NYSE:
, which yields 12.4%. And Bermuda-based outfits like
, which pays an impressive 8%.
But there's a catch. While there's no question that foreign markets
harbor some of the best income stocks in the world -- if you're
simply searching for stocks thatoffer fat dividend yields, then
you're taking on far more risk than you might imagine.
In 2011 -- a year that featured a relatively stable globaleconomy
and solid corporateearnings -- just 101 domestic companies cut
theirdividend payments. Looking back at the data for the last
decade, that's a pretty typical number.
But in the depths of the lastrecession , things got much, much
worse. Investors who depended on dividend payments to generate
stable, recurring income got crushed.
In 2008, an incredible 606 companies were forced to cut their
dividend payouts. And in 2009, more than 800 companies slashed
The lesson here is simple -- if you want to steadily compound your
money over time, then you can't blindly invest in a basket of
Instead, you need to pay close attention to each company'sbusiness
model , financial stability and future prospects. In doing so, you
need to make sure that you only invest in companies that are likely
to maintain -- and ideally increase -- their dividends in the
A good place to start is to search for companies that have a long,
consistent track record of raising their dividends.
With that in mind, I recently ran a screen on my company's
Bloomberg terminal looking for stocks yielding at least 6% that
have also delivered average annual dividend growth of at least 5%
for the last decade. And since my focus is on international stocks,
I only looked at foreign companies trading as ADRs on U.S.
Here's what I found...
Out of the 247 ADRs that pay dividend yields greater than 6%,
only seven of them were able to steadily raise their dividends
during the last decade.
That's a rare feat. After all, it's easy for a company to raise its
dividend in a strong economic environment, but only the most
consistent companies are able to boost their payouts through
economic downturns like the one we saw a few years ago.
Although all seven of these consistent dividend growers are worth
National Grid (
looks to be the most promising.
National Grid is a diversified utility that provides electricity to
Great Britain and parts of the northeastern United States.
Just as in the United States and most other developed economies,
utilities like NGG are considered natural monopolies.
Thatmonopoly status has helped the company raise its dividend year
in and year out for more than a decade. In fact, since 1996 NGG has
increased its dividend every year but one.
Looking ahead to the remainder of 2012 and into 2013, National Grid
expects to boost its dividend yet again. And given the company's
history, I'm confident it will.
Action to Take -->
Stocks like NGG are exactly what I look for in my premium
. The company provides a basic necessity that people can't live
without, and the firm's steady monopoly business should continue to
support its dividend growth in both good times and bad.
If this low interest rate environment has you looking for higher
yields, then I suggest looking for international stocks with a
history of boosting their payouts. After all, any company can raise
its dividend in abull market ... but only a select group of
companies can raise their dividends through both good times and
-- Paul Tracy
[Note: For more information about international dividend stocks,
I invite you to read my latest presentation, where I've included
names and tickers symbols of many other high-yield international
plays. Visit this link to learn about these stocks now.]
Paul Tracy does not personally hold positions in any securities
mentioned in this article. StreetAuthority LLC does not hold
positions in any securities mentioned in this article.
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